In a market economy, supply and demand are important because they
a. are direct policy tools used by government agencies to regulate the economy.
b. illustrate when an market is in equilibrium, but they are not helpful when a market is out of equilibrium.
c. can be used to predict the impact on the economy of various events and policies.
d. All of the above are correct.
c
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The supply-side effects show that a tax cut on labor income ________ employment and ________ potential GDP
A) increases; increases B) increases; does not change C) increases; decreases D) decreases; increases E) decreases; decreases
The marginal product of labor (measured in units of output) for Relient Corp is given by MPN = A(200 - N)
where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $30? A) 170 B) 185 C) 190 D) 195
Faced with a decrease in the demand for its product, a monopolist will lower prices and maintain output at its previous level if
A) the gain in profit is less than the increase in real wages paid. B) the gain in profit is less than the decrease in real wages paid. C) the gain in profit is less than the menu costs. D) the gain in profit is greater than the increase in menu costs.
The most distinguishing economic feature of money is its
A) medium of exchange role. B) store of value role. C) unit of account role. D) standard of deferred payment role.